Air Force lifts suspension; ZDS ready to fix problems

By Bob Brewin

Sep 22, 1996

The Air Force quickly reversed course on its suspension of the Zenith Data Systems Desktop V PC contract reopening it just six days after the Standard Systems Group (SSG) temporarily halted the placement of new orders.

SSG will allow ZDS to ship Desktop V orders in 30 days instead of the required 10 days for domestic orders and 14 days for overseas orders received through Nov. 15 according to Ken Heitkamp the command's technical director. In return Heitkamp said ZDS will provide users with "additional hardware capabilities" at no cost "for their inconvenience."

SSG suspended ordering on the ZDS Desktop V contract on Monday Sept. 9 due to late deliveries from ZDS. The command dispatched a high-level team to the Sacramento Calif. factory of Packard Bell Electronics Inc. (the new corporate parent of ZDS) at the same time to examine how that facility received packaged and shipped Desktop V PC orders. SSG lifted the suspension on Saturday Sept. 14 according to Heitkamp.

"We're satisfied ZDS can meet its commitment to our customers for the interim [period] in which we have relaxed delivery requirements as well as its ability to meet its originally proposed capability " Heitkamp said.

ZDS moved production from its plant in St. Joseph Mich. to Sacramento just as the peak federal buying season started this summer which exacerbated the delivery problems Heitkamp said.

"In hindsight the primary problem was the decision to prematurely transfer production from St. Joseph to Sacramento. They probably should not have ramped down St. Joe until the Sacramento facility had been ramped up to meet the production requirements of the Air Force " he said.

The Air Force and ZDS are still working out details of the "consideration" buyers will receive but Heitkamp said the package already includes a larger-capacity disk drive on ZDS portables and an additional increase in memory on servers from 48M to 64M of RAM. "We're still finalizing the details " Heitkamp said.

ZDS AF Get the Good News Out

Pat Gallagher ZDS' sales vice president said his company and SSG sent out messages "to the world on Saturday that the suspension was lifted and the order flow has already picked up substantially." Gallagher said he agreed with Heitkamp that shifting production from Michigan to California caused a lot of the problems ZDS encountered with Desktop V.

But Gallagher added "since that plant produced commercial products as well as PCs for state and local markets [each with its own peak buying season] there really was no good time to make the move." Once ZDS overcomes its problems in the Sacramento plant Gallagher believes the Air Force will ultimately benefit from the move. "The Air Force now has a much larger more facility-rich company to meet its needs " Gallagher said.

No Long-Term Damage Expected

Bob Dornan senior vice president of Federal Sources Inc. said the suspension will not cause ZDS any long-term damage. ZDS has held and performed well on every Air Force Desktop PC contract it has held Dornan said and "based on that long-standing relationship this is just a blip."

Dornan added that "any vendor may encounter problems so how they deal with them is the real issue."SSG has adopted what many vendors view as a "highly aggressive" stance toward ZDS and its performance on Desktop V Dornan sees this as a reflection of a key change in the group's funding sources.

Starting with the 1997 fiscal year SSG will no longer get the bulk of its funding directly from mission areas. Instead close to 90 percent will come from the Defense Business Operations Fund (DBOF) with which users and customers will "buy" goods and services.

This change in funding will require SSG to become a customer-focused organization in order to survive Dornan said. "The primary rule of DBOF is `Know thy customer ' or you're history " Dornan said.